By Brendan Conway

Trading in Garmin’s shares is at a five-week high today at more than 1.9 million shares, FactSet Research Systems data show, and it’s only 1.25 p.m. Look for volume to reach the highest since Aug. 1, when more than four million shares changed hands.

There’s a transparency argument for why indexers — though not all of them — announce these moves ahead of time. As today’s trading action shows, there’s also a cost. Arbitrageurs and hot money pile in after the announcement and drive up the price irrespective of company fundamentals.

If you suspect that it matters for holders of broad-based index trackers like the SPDR S&P 500 Trust (SPY) or the iShares Core S&P 500 (IVV), a few studies suggest you’re correct.

About Focus on Funds

As exchange-traded funds and other investing vehicles have ballooned in number, the task of figuring out what works well and what doesn’t has only gotten harder. Barrons.com’s Focus on Funds looks under the hood of ETFs, mutual funds and hedge funds for overlooked values, actionable ideas and the latest pitfalls for fund investors.

Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.